Did you get declined because of your high credit score?

A high credit score is universally viewed as a positive thing, but if you pay your balances off fully and always on time, you may not be targeted by banks for new credit cards. In very rare cases, banks may even decline certain credit card applications, on the grounds that they will not make any revenue from your outstanding balances. However, don't go making late payments to purposefully bring your score down just yet; the pros of a high credit score far outweigh the occasional cons.

Credit card issuers generally make their profits in one of three ways: interest on outstanding monthly balances, interchange fees paid by merchants whenever a transaction at a store is paid for by credit card, and fees assessed when people make late payments on their card. How much each type of revenue contributes to a bank's total profit is generally kept secret, but for most financial institutions, interest on balances constitutes around 70 percent of credit card income. This means that banks don't stand to make much money on consumers who pay off their balances completely, unless it is through interchange fees.

People with slightly lower credit scores, generally in the 600s, tend to make the credit card issuers even more money than those with scores over 800, since they contribute to all three sources of issuer revenue.

In turn, banks tend to send credit card applications to people with middle-of-the-road scores far more often than they do to people with extremely high scores. This is reflected in the average number of cards held by each group. People who had an average credit score of 673 had a mean of 2.63 credit cards in their wallets, but people with an average score of 730 had a lower mean of 2.14 cards.

If you suspect you have been turned down for a credit card because your score was too high, don't worry. Plenty of other card issuers are willing to give a card to a low-risk consumer.

-Seth Berger